Annual General Meetings for Aston Martin and BAE Systems to be held remotely this year.
A New Era for AGMs: The Digital Shift
The latest entrants in the digital revolution are defense giant BAE Systems and luxury car manufacturer Aston Martin, who have opted to hold their annual general meetings (AGMs) exclusively online. This move follows The Mail on Sunday's expose that pharmaceutical powerhouse AstraZeneca and toothpaste producer Haleon have chosen similar digital-only formats for their AGMs.
Critics argue that these companies are curbing free debate and dissent, thus weakening shareholder democracy. They further claim that this move could trigger legal actions, as the legislation is ambiguous about the format an AGM should take.
Though a physical location is required for the meeting, it's unclear whether the board must be present or investors can attend. Firms contend that traditional, face-to-face meetings are costly and vulnerable to disruptions, like the protests at Drax last week.
During the pandemic, many companies swiftly adapted to digital meetings. Most have now migrated to a 'hybrid' model, which continues to offer shareholders the option to attend in person to scrutinize the board.
BAE Systems allows shareholders to log in to its digital AGM from a conference center in Farnborough, Hampshire, though no board directors will attend. On the other hand, Aston Martin plans to hold its AGM 'electronically by audio webcast,' failing to specify a physical location for the event.
Legal advisors explain that the Companies Act, drafted in 2006 — before online meetings gained popularity — leaves room for interpretation on virtual AGMs. AstraZeneca conducted its AGM in a broadcast suite at The Oval cricket ground in South London.
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'Holding a completely virtual AGM with no in-person attendance Option could cast doubt on the legitimacy of resolutions at the meeting, such as the election of directors, appointment of auditors, and dividend declarations,' one legal expert opines.
However, it's important to note that not all directors are required to be present at an AGM, physically or virtually. Some directors may find it challenging to attend due to being based outside the UK. Moreover, directors only have to answer general questions during the meeting.
Some companies have returned to hybrid meetings under pressure from their shareholders. Notable examples include Marks & Spencer and Clarkson, who both suffered shareholder revolts over boardroom compensation.
Loss-making Aston Martin has faced continuous shareholder disputes over executive compensation and perks. The company paid its former CEO Amedeo Felisa £1.6 million to commute from his home in Italy to the company's headquarters in the Midlands via private jet.
Both BAE Systems and Aston Martin are scheduled to hold their AGMs on Wednesday.
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- Some legal experts have expressed concerns that a completely virtual AGM with no in-person attendance might question the validity of resolutions like the election of directors, the appointment of auditors, and dividend declarations.
- It's crucial to understand that not all directors are mandated to be present at an AGM, either physically or virtually. This could be due to directors being based outside the UK.
- Companies like Marks & Spencer and Clarkson have reverted to hybrid meetings under pressure from their shareholders, demonstrating that a shift towards online meetings is not irreversible.
- Both BAE Systems and Aston Martin plan to hold their respective AGMs online on Wednesday, raising questions about transparency and shareholder access in the digital era of business and finance.
